The IMF headquarters building is seen ahead of the IMF/World Bank spring meetings in Washington, US. Picture: Reuters/Yuri Gripas/File Photo
The IMF headquarters building is seen ahead of the IMF/World Bank spring meetings in Washington, US. Picture: Reuters/Yuri Gripas/File Photo

Uganda urgently seeks World Bank help over coronavirus

By Elias Biryabarema Time of article published Mar 20, 2020

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Kampala - Uganda will request the World Bank for a loan of $190 million to help cushion its economy from the impact of the coronavirus outbreak, the finance minister said.

Separately, the Ugandan central bank said it would provide liquidity to commercial lenders in case they experienced distress as a result of economic disruptions caused by outbreak.

The government has cut economic growth forecast this fiscal year to 5.2–5.7% from an initial projection of 6%, Finance Minister Matia Kasaija said in a statement.

The disruption caused by the coronavirus are expected to cut industrial output, tourism earnings and the government's tax collections.

The government will seek a $100 million budget support loan for this financial year and a further $90 million for the next financial year , Kasaija said.

It will also approach the International Monetary Fund for help with a projected decline in foreign exchange reserves from 4.2 months worth of imports to 3.5 months.

The Ugandan shilling declined sharply this week, prompting the central bank to intervene three times in a row to sell dollars and offer support.

Kasaija said as a result of the economic upheaval from the outbreak, Uganda's imports were expected to decline 44% in the four months to June. The expected widespread loss of jobs was likely to push an estimated 780,000 people into poverty, he said.

The central Bank of Uganda (BoU) said in a statement it would provide "exceptional liquidity assistance for a period of up to one year" to commercial banks to help them cope with the impact of the outbreak.

The bank did not give details of how much it was making available to banks but added it would also "put in place a mechanism to minimise the likelihood of sound businesses going into insolvency due to lack of credit".

Uganda has not reported any cases of the coronavirus, which emerged in China late last year and has been spreading around the world.

Nevertheless, on Wednesday, the government ordered the closing of schools, bars and it banned public gatherings to prevent any outbreak. 

Reuters

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